Subject: Re: Asset Tokenization
What in the world is "asset tokenization"?

Ooooh! A legal discussion!

Tokenization means that ownership of an asset is legally represented by something other than the asset itself - a "token" of that asset. The classic example is (or was) bearer bonds, which were the things that Hans was trying to steal in Die Hard. The asset was money held in a bank, but ownership of that money vested in whoever happened to be holding the physical "bearer bonds" - the 'token' of that asset. Traveller's cheques and deeds for real estate work similarly. You sell real property by giving someone a deed (a "token") that represents ownership of the actual asset.

This works because there are laws that make ownership/transfer of the token equivalent to ownership/transfer of the asset. If someone transfers a deed to a house to you, under the laws of your state that means that ownership of the house has transferred to you.

In the heyday of Peak Blockchain (circa 2017-2018), there were all kinds of proposals and predictions for how blockchain could be used to convey ownership of things more easily or efficiently. Blockchain systems are very useful for moving tokens around; transferring them, receiving them, keeping track of where they are, etc. So people thought, "Hey, this is much more efficient than real estate deeds or car titles, so why not use blockchain to buy and sell those things as well?"

Nearly all of these efforts came to nothing, because while coming up with ways to transfer and track tokens is a solvable technical problem (witness the success of crytpocurrency as something that works for that purpose), there's no real way to actually create a tie between the token and the physical asset. IOW, there's no way to "tokenize" the asset - to actually establish that the "token" of the thing corresponds to ownership of the thing. You can create all sorts of systems for moving the tokens around, but the tokens don't really correspond to any real world assets in a way that works for conveying ownership of the real world assets. Because there aren't any laws that say that ownership of the crypto token means you own anything in the real world, and you can't really create that type of system just using contracts.